Brexit brings house price surge to Frankfurt as 'commuting' London bankers prepare to move

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Brexit is fuelling a surge in house prices in Frankfurt as London bankers prepare to relocate there ahead of the March 2019 leave deadline.

The home to the European Central Bank HQ has seen a significant spike in property prices, including luxurious bankers’ flats, as City workers based in London gear up to leave the capital or ‘commute’ there for work.

Last week Frankfurt announced plans to relax strict labour laws for companies employing “risk takers” in the financial sector following the German election this September.

The trend is supported by a major report by Deutsche Bank which shows property prices in the city rising by as much as 11 per cent in the wake of Article 50 being triggered.

In April, Deutsche Bank chief regulatory officer Sylvie Matherat also suggested up to 4,000 jobs could be moved to Frankfurt from London.

“For front office people if you want to deal with EU clients you need to be based in the EU, in continental Europe. Does that mean that I have to move all the front office people to Germany or not?” she said.

City: Bankers are preparing to relocate from London in the wake of Brexit (PA)

“We are speaking of 2,000 people – that’s not a small number,” adding that a further 2,000 jobs were at risk.

She said employers “need clarity – and the sooner the better” but the bank has not given any further announcement since.

And Reuters agency cited JP Morgan, Standard Chartered, Citigroup, UBS and Goldman Sachs as companies considering relocating staff – naming Frankfurt and Dublin as the preferred options. 

Other reports have suggested that Barclays could be considering relocating members of staff to their offices in Frankfurt, but a spokesman refuted these claims when questioned by the Standard.

A 2017 report by Deutsche Bank revealed that, by January, the “Brexit effect” had forced up prices of residential properties in Frankfurt by more than 11 per cent compared with the previous year.

International property expert Olivier Peters said the company is seeing a spike in the number of London ‘commuters’ looking to buy small flats.

Brexit: Property expert Olivier Peters said he has seen a spike in the number of Londoners looking to move to Germany

Mr Peters, the Managing Director of Peters and Peters Sotheby’s Realty, based in Germany, said: “The prices in Frankfurt were already high and the city was seeing 1000 new people moving in each month, but this has gone up since the Brexit vote.

“We have been analysing the number of ‘clicks’ we have on each properties  and for the first time we are seeing that the country where the second highest number of clicks is coming from is London.

“It is quite amazing to see the difference. 

“We are getting some requests from people based in London who are mostly looking for small, studio flats that are fully furnished in a luxury style.

“They will be commuting into the country and working here Monday to Friday – then travelling back to the UK on the weekend to be with their families.”

A penthouse in the West End, Frankfurt, is on the market for almost €2.4 million with Peters and Peters.

Property: This luxury apartment in Frankfurt has increased in price by 10 per cent since Brexit

And, according to the agent handing the sale, its asking price has shot up by 10 per cent since Theresa May triggered Article 50 to begin the process of the UK withdrawing from the EU.

The Deutsche Bank report predicted that property prices will be rising by more than that year-on-year in the lead-up and aftermath of Brexit. 

The report states that the City of Frankfurt’s expects the number of residents to increase by 40,000 to 764,000 by 2020.

“Impetus from the Brexit vote caused prices to surge in 2016,” the report reads.

“Probably in anticipation of wealthy London bankers moving to the city, prices for family homes rose particularly sharply, going up by 11.75 per cent year-on-year in Frankfurt compared with a 6 per cent increase across the major cities.

Property: The penthouse is available at a guide price of 2.388.000 EUR through Peters & Peters Sotheby’s International Realty

“Because of the high level of migration to Frankfurt, rents and prices are expected to continue to rise rapidly over the coming years.”

Mr Peters, who deals mainly with residential properties but also a small number of commercial sales, added: “I think commercial companies are in talks with UK banks who may be wanting to move over.

“And now developers are changing their plans and focussing on smaller flats – say from 80sf to 40sf – as it seems to be the message that there will be a lot of commuters travelling back and forth who want these types of studio properties.”

Mr Peters said the full statistics will not be published until November 2017 but said he expected to see a spike in house-prices as demand continues to grow.

He said the higher prices would still “not compare” to those of London, however, and said he was not sure whether this would cause a dip in property prices in the capital.

“London is such a large and international city that I think it will be okay,” he added. “But you never know.”

The Deutsche Bank report also cited immigration, the refugee crisis and a subsequent housing shortage as causes for the surge in house prices in Germany.

It stated that Germany’s population has risen to 83 million – almost three million more than in 2009.

“The most recent figures available from the City of Frankfurt show a housing shortage of around 30,000 homes in 2014,” the report states.

“This figure is likely to have continued to increase in 2015 and 2016.”

The report adds that Munich is the “most dynamic German city” with “fast-rising population and historically low vacancy rate likely to lead to further price increase for many years to come”.

Further price rises are also expected in Berlin and, in the 2009 to 2016 property cycle analysed in the report, Frankfurt in fact showed the lowest increase in prices.

“However, we are now seeing the Brexit effect which is driving up prices for family homes in particular.” 

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